To embed, copy and paste the code into your website or blog:
In April 2021, the Securities and Exchange Commission approved amendments to the New York Stock Exchange’s shareholder approval rules for related party issuances and the issuance of 20% or more of a company’s stock. The amendments bring the NYSE’s shareholder approval requirements into closer alignment with those of the Nasdaq and are similar to the temporary COVID-19 waivers of the NSYE's shareholder approval rules that expired in 2020 discussed in our earlier Viewpoints advisories.[1]
Related Party Issuances
Before the new amendments, Section 312.03(b) of the NYSE Listed Company Manual generally required prior shareholder approval of any issuance to (1) a director, officer or substantial security holder, (2) a subsidiary, affiliate or other closely related person of a director, officer or substantial security holder or (3) any company or entity in which a director, officer or substantial security holder has a substantial direct or indirect interest, in each case, if the number of shares of common stock to be issued (or into which the securities issued may be convertible or exercisable) exceeded either 1% of the number of shares of common stock or 1% of the voting power outstanding before the issuance. There were limited exceptions to this rule for (1) issuances by “early stage companies” for cash and (2) issuances of up to 5% of the company’s outstanding common stock to substantial security holders for cash at a price equal to at least the NYSE’s “Minimum Price”.[2]